Most taxpayers claiming car expenses use the cents per kilometre method, but the ATO says common misconceptions are leading to lodgment errors.
Here are the Top 5 Myths BUSTED:
Myth 1: “I can claim home to work travel”
Generally NO – regardless of method, you can’t claim commuting. Only very few exceptions, like carrying bulky tools with no secure storage at work.
Myth 2: “Just claim 5,000km, no records needed”
Wrong. You MUST keep records of ownership or personal lease, how the car was used for work, and how you worked out the kms.
Myth 3: “Lease type doesn’t matter”
It does. If you have a novated lease through salary sacrifice, the car isn’t owned by you, so you can’t claim cents per km. The ATO receives data on novated leases to check this. You may still claim parking & tolls if not reimbursed.
Myth 4: “I can claim depreciation as well”
Wrong. Decline in value is already built into the cents per km rate, along with rego, insurance, fuel, maintenance. You can only claim depreciation separately under the logbook method.
Myth 5: “I can split the year – use both methods to maximise”
Wrong. You must use the SAME method for the full income year. Keep all records so you can choose the best method at tax time.
Tip: Use the myDeductions tool in the ATO app to log trips and share with us.
Source: https://www.ato.gov.au/tax-and-super-professionals/for-tax-professionals/tax-professionals-newsroom/top-5-myths-busted-cents-per-kilometre-method
General info only. This is not personal tax advice. Tax laws change. You should seek advice specific to your circumstances from a registered tax agent before acting.
